During the three years of corporate downsizings andbankruptcies, more than five million sf of vacant space was addedto the market causing the vacancy rate to skyrocket from 11.1%during the first quarter of 2001 to 20.6% by the fourth quarter of2003. At the end of the second quarter of 2005, the office vacancyrate for the metro area stood at 20.9%, but the quarter marked thefifth time in six quarters that the region enjoyed a positiveabsorption of office space. Also, Grubb says, 667,167 sf of officespace is under construction in the Detroit area.

The report says that trends over the past six quarters indicatea turnaround. "Spurred primarily by demand from the mortgageindustry, as low-interest rates and the housing boom fueled thedemand for financing, more than 560,308 sf of office space has beenabsorbed since January 2004," the company said in the quarterlyresearch report.

During the second quarter of 2005, Detroit's eastern markets sawslight vacancy increases, while west side vacancy rates declined.Grubb & Ellis says though that while possible continuedtroubles at the Big Three automakers and Kmart's departure hoverover the Detroit region like a gray cloud, the future of the AnnArbor-area office market could not look brighter. The search is onfor Google as it looks for a presence in either Ann Arbor or Bostonto house its new operations that will be the first of its kind todigitize the entire libraries of several universities includingHarvard, Stanford, Oxford and University of Michigan. The averageasking price for class A office space in the metro area is $26.01per sf.